October 17, 2006 RANCHO RANCHO PALOS VERDES CITY COUNCIL AGENDA-CONSIDERATION OF AN ORDINANCE OF THE CITY OF RANCHO PALOS VERDES REPEALING ORDINANCE NO. 446U, AMENDING ORDINANCE NO. 445, AND AMENDING SECTIONS OF THE RANCHO PALOS VERDES MUNICIPAL CODE RELATING TO THE ISSUANCE OF BUSINESS PERMITS
October 17, 2006 RANCHO RANCHO PALOS VERDES CITY COUNCIL AGENDA-CONSIDERATION OF AN ORDINANCE OF THE CITY OF RANCHO PALOS VERDES REPEALING ORDINANCE NO. 446U, AMENDING ORDINANCE NO. 445, AND AMENDING SECTIONS OF THE RANCHO PALOS VERDES MUNICIPAL CODE RELATING TO THE ISSUANCE OF BUSINESS PERMITSOctober 17, 2006 RANCHO RANCHO PALOS VERDES CITY COUNCIL AGENDA-CONSIDERATION OF AN ORDINANCE OF THE CITY OF RANCHO PALOS VERDES REPEALING ORDINANCE NO. 446U, AMENDING ORDINANCE NO. 445, AND AMENDING SECTIONS OF THE RANCHO PALOS VERDES MUNICIPAL CODE RELATING TO THE ISSUANCE OF BUSINESS PERMITS

TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL

FROM: Carol Lynch, City Attorney

DATE: October 17, 2006

SUBJECT: CONSIDERATION OF AN ORDINANCE OF THE CITY OF RANCHO PALOS VERDES REPEALING ORDINANCE NO. 446U, AMENDING ORDINANCE NO. 445, AND AMENDING SECTIONS OF THE RANCHO PALOS VERDES MUNICIPAL CODE RELATING TO THE ISSUANCE OF BUSINESS PERMITS

RECOMMENDATION

Read Ordinance No. 445 “AN ORDINANCE OF THE CITY OF RANCHO PALOS VERDES REPEALING ORDINANCE NO. 446U, AMENDING ORDINANCE NO. 445, AND AMENDING SECTIONS OF THE RANCHO PALOS VERDES MUNICIPAL CODE RELATING TO THE ISSUANCE OF BUSINESS PERMITS” by title only, waive further reading, and introduce the ordinance.

Read Ordinance No. ____-U “AN ORDINANCE OF THE CITY OF RANCHO PALOS VERDES REPEALING ORDINANCE NO. 446U, AMENDING ORDINANCE NO. 445, AND AMENDING SECTIONS OF THE RANCHO PALOS VERDES MUNICIPAL CODE RELATING TO THE ISSUANCE OF BUSINESS PERMITS, AND ADOPTING FINDINGS OF URGENCY” by title only, waive further reading, and adopt the ordinance.

EXECUTIVE SUMMARY

At the last City Council meeting, the City Council adopted Ordinance No. 447U, an urgency interim zoning ordinance prohibiting the establishment of marijuana dispensaries, stores, or co-ops in any zoning district within the city. That ordinance is still in effect and is not being altered by the ordinances that are attached to this staff report.

Additionally, the City Council also adopted Ordinance No. 446U, an urgency ordinance amending certain provisions of the business license code. Pursuant to the City Council’s direction, that urgency ordinance is being repealed and replaced with a new urgency ordinance to reinstate pre-existing provisions of the business license section and to amend the business permit provisions of the Code, which regulate businesses, to include the provisions regarding medical marijuana dispensaries, stores and co-ops and prohibit such uses as long as they are illegal under federal law.

Pursuant to the City Council’s direction, we are bringing back for your consideration an ordinance to repeal Ordinance No. 446U, amend Ordinance No. 445, and amend the business permit provisions of the Rancho Palos Verdes Municipal Code (“RVPMC”). Among other things, this ordinance:

1. Makes medical marijuana dispensaries, stores, and co-ops (“MMDs”), as defined in the ordinance, subject to the City’s business permit regulations contained in Chapter 5.10 of the RVPMC.

2. Makes it clear that the City will not issue business permits for medical marijuana dispensaries, stores, and co-ops so long as such businesses, and the activities they conduct, are prohibited by federal, state, or local law.

3. Clarifies the grounds upon which business permits may be denied.

4. Requires that all applicants for a business permit must affirm that their business will not be an illegal or unlawful business.

5. Reinforces that any business license or business permit issued does not authorize any illegal or unlawful business or practice.

6. Repeals the provisions adopted at the October 5, 2006 meeting of the City Council requiring a business license applicant to affirm that their business will not be an illegal or unlawful business.

BACKGROUND

The background, discussion and attachments are hereby incorporated by reference from the October 5, 2006 Staff Report regarding Consideration of (1) An Ordinance of the City Of Rancho Palos Verdes Amending Sections of The Rancho Palos Verdes Municipal Code Relating to the Issuance of Business Licenses and (2) An Urgency Interim Zoning Ordinance Prohibiting the Establishment of Marijuana Dispensaries, Stores, or Co-Ops In Any Zoning District Within the City.

DISCUSSION

The business permit regulations of Chapter 5.10 of the RVPMC already include a prohibition against the issuance of a business permit to a business that is prohibited by law. MMDs are not currently subject to Chapter 5.10 regulations. The draft ordinance would add MMDs as a business that is subject to Chapter 5.10, and MMDs would not be allowed to operate in the City without a business permit. So long as the use, sale and processing of marijuana is unlawful under federal law, no business permit would be issued by the City to an MMD, and an MMD would be prohibited from conducting business in the City. Thus, if an MMD tried to establish itself in the City, the business could be enjoined from operating for failure to have a business permit.

The draft ordinance also clarifies the prohibition against the issuance of a business permit to a business that is prohibited by state, federal or local law. RVPMC Sections 5.10.040A.4 and 5.10.040B.4 currently provide that a business permit shall be denied if, among other things, “[t]he business is prohibited by any law, statute, rule or regulation, or prohibited in the particular location or zone by any law, statute, rule, or regulation.”

The draft ordinance broadens this language, making it clear that if the business is unlawful, or its activity is unlawful, a business permit may be denied. Specifically, a business permit shall be denied if “[t]he business is an illegal or unlawful business or practice under the laws of the United States, the laws of the State of California, the federal and state constitutions, this Code, or any other applicable law, ordinance, rule or regulation; or involves the furnishing, sale, or provisioning of any service, good, or product that is illegal or prohibited under the laws of the United States, the laws of the State of California, the federal and state constitutions, this Code, or any other applicable law, ordinance, rule or regulation; or the business, or any part, conduct, or aspect of the business, is prohibited in the particular location or zone by any law, statute, rule, or regulation.”

To protect the City and its officers and employees, both the business license provision and the business permit provision are amended to clarify that the issuance of any such license does not authorize any illegal activity. In the event a license or permit is issued in error, this provision would make it clear that such issuance does not grant permission to operate a business in violation of the law.

Finally, as requested by the City Council, this ordinance repeals the amendments that were made to the business license application and renewal forms by urgency ordinance No. 446U. Specifically, the modifications that required applicants and re-applicants to affirm that their business will not be an illegal or unlawful business are being repealed, and the provisions as each existed prior to October 5, 2006 are being reinstated. The Council took this action because of the concern that these changes would convert the purely revenue raising provisions of Section 5.04 into a regulatory scheme. However, the attached ordinances retain one amendment to the business license ordinance that reinforces that any business license, which is issued by the City, does not authorize any illegal or unlawful business or practice.

Urgency Ordinance

In addition to the regular ordinance adopting the above-described business license and business permit provisions, the Council is also being asked to adopt an urgency ordinance effecting the same amendments. Because the establishment of medical marijuana dispensaries, stores, or co-ops within the City has the potential to cause adverse impacts to surrounding development and to risk the public peace, health, safety, and welfare of the City’s residents and the general public, it is urgent that the City adopt a business permit system for MMDs that provides that such business will not be permitted in the City so long as they violate state or federal law. Thus, the City Council must adopt the proposed urgency ordinance by at least a four-fifths vote and further must find that it is necessary that the proposed ordinance take immediate effect for the preservation of the public peace, health and safety. Staff believes the following facts, which are set forth in Section 4 of the urgency ordinance, provide the legal basis for making these findings:

“The City of Rancho Palos Verdes issues business licenses and business permits for businesses doing business within its boundaries. The City has not yet established any express regulation banning medical marijuana dispensaries, stores, or co-ops so long as their operation violates federal, state, or local laws. The establishment of medical marijuana dispensaries, stores, or co-ops within the City, in violation of federal law, has the potential to cause adverse impacts to surrounding development and to risk the public peace, health, safety, and welfare of the City’s residents and the general public. Further, public officials and employees are put at risk for being co-conspirators if required to issue business licenses and business permits to businesses whose activities violate federal law. Thus, it is urgent that the City adopt this ordinance requiring that all marijuana dispensaries, stores, and co-ops obtain a business permit before operating within the City’s jurisdictional boundaries, while clarifying the provisions that prohibit the issuance of a business permit to those businesses that conduct activities that are illegal under the Rancho Palos Verdes Municipal Code, the laws of the State of California, or the laws of the United States of America, and reinforcing that business licenses do not authorize the conduct of unlawful businesses or activities. Based on the foregoing, the City Council hereby finds that there exists a current and immediate threat to the public health, safety or welfare requiring this regulation of marijuana dispensaries, stores, and co-ops; further hereby finds that this ordinance is necessary for the immediate preservation of the public peace, health or safety; hereby declares the facts constituting the urgency; and passes this ordinance by at least a four-fifths vote of the City Council. Accordingly, this measure is adopted immediately upon introduction pursuant to Government Code Section 36934 and shall take effect immediately pursuant to Government Code Section 36937(b).”

CONCLUSION

If the City Council concurs with Staff’s recommendation, the City Council should read the attached Business License and Business Permit Ordinance by title only, waive further reading, and introduce the Ordinance and read the attached Business License and Business Permit Urgency Ordinance by title only, waive further reading, and adopt the Business License and Business Permit Urgency Ordinance.

ALTERNATIVES

The City Council could give Staff additional direction about these issues, which could be incorporated into a revised ordinance(s), or the City Council could decline to adopt the either or both ordinances.

Respectfully submitted,

Carol Lynch, City Attorney

Reviewed by,

Les Evans, City Manager

Attachments:

Draft Ordinance

Draft Urgency Ordinance

ORDINANCE NO. 445

AN ORDINANCE OF THE CITY OF RANCHO PALOS VERDES REPEALING ORDINANCE NO. 446U, AMENDING ORDINANCE NO. 445, AND AMENDING SECTIONS OF THE RANCHO PALOS VERDES MUNICIPAL CODE RELATING TO THE ISSUANCE OF BUSINESS PERMITS

WHEREAS, the City of Rancho Palos Verdes issues business licenses and business permits for certain businesses doing business within its boundaries; and

WHEREAS, in 1996, the California voters adopted Proposition 215, the Compassionate Use Act (“Prop 215”), decriminalizing the use of marijuana for medical purposes, which was augmented by the state legislature in 2004 and codified at Section 11362.5 et seq. of the California Health and Safety Code; and

WHEREAS, widespread implementation of Prop 215 was delayed due to several ensuing court cases challenging its validity; and

WHEREAS, the United States Supreme Court has ruled that the federal Commerce Clause powers gave Congress the authority to enact the Controlled Substances Act, which bans, among other things, the cultivation, use and transfer of marijuana for noncommercial purposes even though that cultivation, use and transfer occurs completely within the State of California, so that the federal ban covers marijuana cultivated, used or transferred pursuant to Prop 215, however, the Court did not expressly invalidate Prop 215 (Raich v. Ashcroft (2005) 125 S. Ct. 2195); and

WHEREAS, a subsequent Ninth Circuit holding puts cities on notice that a city cannot invoke federal immunity for a marijuana dispensary operator by designating that operator as an “official” city dispensary operator (United States v. Rosenthal (2006) 454 F.3d 943), from which it can be inferred that city officials could potentially incur co-conspirator liability if they authorize activities that violate federal law; and,

WHEREAS, the City has not yet established any express regulation banning medical marijuana dispensaries, stores, or co-ops so long as their operation violates federal, state, or local laws; and

WHEREAS, at least two neighboring cities had medical marijuana dispensaries established within their jurisdiction; and

WHEREAS, with the expansion of medical marijuana dispensaries in other cities, it is foreseeable that a medical marijuana dispensary may seek to establish its business within the boundaries of the City; and

WHEREAS, cities have experienced adverse secondary impacts to the public peace, health, safety and welfare around medical marijuana dispensaries, such as an increase in thefts and robberies in support of illegal drug commerce; and

WHEREAS, the City Council is concerned that the establishment of medical marijuana dispensaries, stores, or co-ops within the City, in violation of federal law, has the potential to cause adverse impacts to surrounding development and to risk the public peace, health, safety, and welfare of the City’s residents and the general public, and further, that public officials and employees are put at risk for being co-conspirators if required to issue business permits to businesses whose activities violate federal law;

NOW, THEREFORE THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES DOES ORDAIN AS FOLLOWS:

Section 1. Urgency Ordinance No. 446U is hereby repealed.

Section 2. Section 5.04.050 of Chapter 5.04 of Title 5 of the Rancho Palos Verdes Municipal Code is hereby revoked and replaced as follows:

“5.04.050 License and tax payment required.

A. There are imposed upon the businesses, trades, professions, callings and occupations specified in this chapter license taxes in the amounts prescribed in this chapter effective upon the effective date of this chapter. It is unlawful for any person to transact and carry on any business, trade, profession, calling or occupation in the city without first having procured a license from the city so to do and paying the tax prescribed in this chapter or without complying with any and all applicable provisions of this chapter.

B. This section shall not be construed to require any person to obtain a license prior to doing business within the city if such requirement conflicts with applicable statutes of the United States or of the state. Persons not so required to obtain a license prior to doing business within the city nevertheless shall be liable for payment of the tax imposed by this chapter.

C. No business license issued by the city pursuant to this chapter shall be construed as authorizing any conduct or continuance of any illegal or unlawful business or practice, or the furnishing, sale, or providing of any service, good, or product that is illegal or prohibited under the laws of the United States, the laws of the State of California, the federal and state constitutions, this Code, or any other applicable law, ordinance, rule or regulation.”

Section 3. Section 5.04.110 of Chapter 5.04 of Title 5 of the Rancho Palos Verdes Municipal Code is hereby revoked and replaced as follows:

“5.04.110 Application—First License

A. Upon a person making application for the first license to be issued hereunder for the applicant’s business for a newly established business, such person shall furnish to the collector a sworn statement, upon a form provided by the collector, setting forth the following information:

1. The exact nature or kind of business for which a license is requested;

2. The place where such business is to be carried on, and if the same is not to be carried on at any permanent place of business, the places of residences of the owners of same;

3. In the event that application is made for the issuance of a license to a person doing business under a fictitious name, the application shall set forth the names and places of residences of those owning said business;

4. In the event that the application is made for the issuance of a license to a corporation or a partnership, the application shall set forth the names and places of residence of the officers or partners thereof;

5. In all cases where the amount of license tax to be paid is measured by gross receipts or by the number of dwelling units, of square feet of commercial or industrial buildings constructed as provided in this chapter, or by the number of vehicles used or other computation, count or similar criteria, the application shall set forth such information as may be therein required and as may be necessary to determine the amount of the license tax to be paid by the applicant;

6. Any further information which the collector may require to enable him to issue the type of license applied for;

7. If the amount of the license tax to be paid by the applicant is measured by gross receipts or by the number of dwelling units or square feet of commercial or industrial buildings constructed as provided in this chapter, or by the number of vehicles used or other computation, count or similar criteria, he shall estimate the gross receipts or number of bedrooms and dwelling units or number of square feet of commercial or industrial buildings constructed, or the number of vehicles to be used or other criteria, respectively, for the period to be covered by the license to be issued. Such estimate, if accepted by the collector as reasonable, shall be used in determining the amount of license tax to be paid by the applicant; provided, however, the amount of the license tax so determined shall be tentative only, and such person shall, within thirty days after the expiration of the period for which such license was issued, furnish the collector with a sworn statement, upon a form furnished by the collector, showing the actual gross receipts or number of dwelling units or square feet of commercial or industrial buildings constructed, or number of vehicles or other criteria, respectively, during the period of such license, and the license tax for such period shall be finally ascertained and paid on the basis of such actual gross receipts, number of bedrooms and dwelling units or square feet or number of vehicles or other criteria, as the case may be, after deducting from the payment found to be due, the amount paid at the time such first license was issued.

B. The collector shall not issue to any such person another license for the same, or any other business, until such person shall have furnished to him the sworn statement and paid the license tax as required in this section.”

Section 4. Section 5.04.120 of Chapter 5.04 of Title 5 of the Rancho Palos Verdes Municipal Code is hereby revoked and replaced as follows:

“License—Renewal

In all cases, the applicant for the renewal of a license shall submit to the collector for his or her guidance in ascertaining the amount of the license tax to be paid by the applicant, a sworn statement, upon a form to be provided by the collector, setting forth such information concerning the applicant’s business during the preceding year (or such other period as may be applicable if the license tax period is less than one year) as may be required by the collector to enable him to ascertain the amount of the license tax to be paid by said applicant pursuant to the provisions of this chapter.”

Section 5. Section 5.10.010 of Chapter 5.10 of Title 5 of the Rancho Palos Verdes Municipal Code is hereby amended by adding alphabetically between “Entertainer” and “Massage establishment” the following definition:

““Marijuana dispensary, store, or co-op” shall be broadly and liberally interpreted to mean and include any person who sells marijuana, trades marijuana, exchanges marijuana, barters for marijuana in any way, or makes marijuana available to the public, whether for medicinal or any other purpose, or who, in connection with the foregoing, delivers, locates, stores, places, processes, or cultivates marijuana.”

Section 6. Section 5.10.010 of Chapter 5.10 of Title 5 of the Rancho Palos Verdes Municipal Code is hereby amended replacing the definition of “Permittee” with the following definition:

““Permittee” means any person holding a business permit pursuant to this chapter.”

Section 7. Section 5.10.020 of Chapter 5.10 of Title 5 of the Rancho Palos Verdes Municipal Code is hereby revoked and replaced as follows:

“Section 5.10.020 Permit required for certain businesses.

A. No person shall commence, conduct or purport to commence or conduct the following business activities within the boundaries of the city of Rancho Palos Verdes without possessing a valid business permit issued pursuant to this chapter:

1. Massage establishment*;

2. Massage technician*;

3. Peddler;

4. Marijuana dispensary, store, or co-op**.

B. No person may advertise or announce a business activity located in the city of Rancho Palos Verdes for which a business permit is required by this Code until he or she has obtained a business permit, when required by this Code. For the purposes of this chapter, “advertising” or “announcement” includes, but is not limited to, disseminating pamphlets or handbills, publishing newspaper announcements, and broadcasting advertisements on radio, television, the Internet, or by any other communication device.

C. When any person is engaged in more than one business activity for which a business permit is required in a single location, that person shall be deemed to be conducting each business activity separate and apart from each other business activity even if the separate business activities constitute a single business.

D. No business permit issued by the city pursuant to this chapter shall be construed as authorizing any conduct of or continuance of any illegal or unlawful business or practice, or the furnishing, sale, or provisioning of any service, good, or product that is illegal or prohibited under the laws of the United States, the laws of the State of California, the federal and state constitutions, this Code, or any other applicable law, ordinance, rule or regulation. Any such business permit shall be void.

E. The director shall keep all applications and related records for business permits under this chapter.

* The applicant is required to be fingerprinted by the Los Angeles County Sheriff’s Department.

** Currently this type of use is unlawful and no business permit shall be issued so long as it remains unlawful.”

Section 8. Section 5.10.030B of Chapter 5.10 of Title 5 of the Rancho Palos Verdes Municipal Code is hereby revoked and replaced as follows:

“B. Contents of Application Form and Renewal Application Form. Applications for business permits and renewal application for business permits shall contain the following information:

1. Identification of the applicant, including the name of the business and the name of all owners of the business. Where the applicant is a corporation, association, partnership, limited partnership or other legal entity, “applicant” shall mean each partner, officer, director, and each shareholder owning or controlling more than ten percent of such entity. “Applicant” shall also mean each partner, officer, director, and any shareholder owning or controlling more than ten percent of any corporation, association, partnership, limited partnership or other legal entity that is an officer, director, shareholder, general partner or managing partner of any such entity that comprises the applicant. Rules and regulations governing the procedure for fingerprinting and photo identification, where such fingerprinting and photo identification is required by an application for a particular business permit, shall be established by the Los Angeles County Sheriff’s department, license detail. A business permit may be issued to a corporation or to a person operating under a fictitious name who has complied with all of the applicable provisions of the Business and Professions Code of this state. In all other cases, a business permit must be obtained in the true name of the individual, or individuals, so applying;

2. A complete description of the business activity proposed to be operated, and the location of such proposed business activity, including the address, telephone number and zone;

3. The name(s), address(es) and telephone number(s) of the property owner(s);

4. The previous use of the property or business, the length of time the building was vacant, and whether there are existing signs on the building;

5. Any changes in signage proposed by the applicant;

6. The number of parking spaces and handicap spaces;

7. The presence and type of landscaping;

8. The presence of trash enclosures;

9. The number of employees;

10. The date the business is expected to open;

11. The proposed hours of operation;

12. An affirmation by the applicant that the business will not be an illegal or unlawful business or practice, and that it will not furnish or provide any service, good, or product that is illegal or prohibited under the laws of the United States, the laws of the State of California, the federal and state constitutions, this Code, or any other applicable law, ordinance, rule or regulation; and

13. Any additional information required for the permitting of a particular business when such additional information is specifically required pursuant to other provisions of Title 5.”

Section 9. Section 5.10.040A.4. of Chapter 5.10 of Title 5 of the Rancho Palos Verdes Municipal Code is hereby revoked and replaced as follows:

“4. The business is an illegal or unlawful business or practice under the laws of the United States, the laws of the State of California, the federal and state constitutions, this Code, or any other applicable law, ordinance, rule or regulation; or involves the furnishing, sale, or provisioning of any service, good, or product that is illegal or prohibited under the laws of the United States, the laws of the State of California, the federal and state constitutions, this Code, or any other applicable law, ordinance, rule or regulation; or the business, or any part, conduct, or aspect of the business, is prohibited in the particular location or zone by any law, statute, rule, or regulation.”

Section 10. Section 5.10.040B.4. of Chapter 5.10 of Title 5 of the Rancho Palos Verdes Municipal Code is hereby revoked and replaced as follows:

“4. The business is an illegal or unlawful business or practice under the laws of the United States, the laws of the State of California, the federal and state constitutions, this Code, or any other applicable law, ordinance, rule or regulation; or involves the furnishing, sale, or provisioning of any service, good, or product that is illegal or prohibited under the laws of the United States, the laws of the State of California, the federal and state constitutions, this Code, or any other applicable law, ordinance, rule or regulation; or the business, or any part, conduct, or aspect of the business, is prohibited in the particular location or zone by any law, statute, rule, or regulation;”

Section 11. The City Council declares that, should any provision, section, subsection, subdivision, paragraph, sentence, clause, phrase or word of this ordinance be rendered or declared unconstitutional, or invalid, or ineffective by any final action in a court of competent jurisdiction, or by reason of any preemptive legislation, the remaining provisions, sections, subsections, subdivisions, paragraphs, sentences, clauses, phrases and words of this ordinance shall remain in full force and effect. The City Council hereby declares that it would have passed each provision, section, subsection, subdivision, paragraph, sentence, clause, phrase or word thereof, irrespective of the fact that any one (1) or more provisions, sections, subsections, subdivisions, paragraphs, sentences, clauses, phrases or words be declared unconstitutional, or invalid, or ineffective.

Section 12. The City Clerk shall cause this Ordinance to be posted in three (3) public places in the City within fifteen (15) days after its passage, in accordance with the provisions of Section 36933 of the Government Code. The City Clerk shall further certify to the adoption and posting of this Ordinance, and shall cause this Ordinance and its certification, together with proof of posting, to be entered in the Book of Ordinances of the Council of this City.

Section 13. This Ordinance shall go into effect and be in full force and effect at 12:01 a.m. on the thirty-first (31st) day after its passage.

PASSED, APPROVED and ADOPTED this _______ day of October, 2006.

AYES:

NOES:

ABSENT:

______________________________

MAYOR

ATTEST:

__________________________________

CITY CLERK

I HEREBY CERTIFY that the foregoing is true and correct copy of Ordinance No. 445 approved and adopted by the City Council of the City of Rancho Palos Verdes at a meeting thereof held on the _____ day of October, 2006.

__________________________________

CITY CLERK

ORDINANCE NO. ___-U

AN ORDINANCE OF THE CITY OF RANCHO PALOS VERDES REPEALING ORDINANCE NO. 446U, AMENDING ORDINANCE NO. 445, AND AMENDING SECTIONS OF THE RANCHO PALOS VERDES MUNICIPAL CODE RELATING TO THE ISSUANCE OF BUSINESS PERMITS, AND ADOPTING FINDINGS OF URGENCY

WHEREAS, the City of Rancho Palos Verdes issues business licenses and business permits for certain businesses doing business within its boundaries; and

WHEREAS, in 1996, the California voters adopted Proposition 215, the Compassionate Use Act (“Prop 215”), decriminalizing the use of marijuana for medical purposes, which was augmented by the state legislature in 2004 and codified at Section 11362.5 et seq. of the California Health and Safety Code; and

WHEREAS, widespread implementation of Prop 215 was delayed due to several ensuing court cases challenging its validity; and

WHEREAS, the United States Supreme Court has ruled that the federal Commerce Clause powers gave Congress the authority to enact the Controlled Substances Act, which bans, among other things, the cultivation, use and transfer of marijuana for noncommercial purposes even though that cultivation, use and transfer occurs completely within the State of California, so that the federal ban covers marijuana cultivated, used or transferred pursuant to Prop 215, however, the Court did not expressly invalidate Prop 215 (Raich v. Ashcroft (2005) 125 S. Ct. 2195); and

WHEREAS, a subsequent Ninth Circuit holding puts cities on notice that a city cannot invoke federal immunity for a marijuana dispensary operator by designating that operator as an “official” city dispensary operator (United States v. Rosenthal (2006) 454 F.3d 943), from which it can be inferred that city officials could potentially incur co-conspirator liability if they authorize activities that violate federal law; and,

WHEREAS, the City has not yet established any express regulation banning medical marijuana dispensaries, stores, or co-ops so long as their operation violates federal, state, or local laws; and

WHEREAS, at least two neighboring cities had medical marijuana dispensaries established within their jurisdiction; and

WHEREAS, with the expansion of medical marijuana dispensaries in other cities, it is foreseeable that a medical marijuana dispensary may seek to establish its business within the boundaries of the City; and

WHEREAS, cities have experienced adverse secondary impacts to the public peace, health, safety and welfare around medical marijuana dispensaries, such as an increase in thefts and robberies in support of illegal drug commerce; and

WHEREAS, the City Council is concerned that the establishment of medical marijuana dispensaries, stores, or co-ops within the City, in violation of federal law, has the potential to cause adverse impacts to surrounding development and to risk the public peace, health, safety, and welfare of the City’s residents and the general public, and further, that public officials and employees are put at risk for being co-conspirators if required to issue business permits to businesses whose activities violate federal law, it is therefore urgent that the City adopt this ordinance to bring medical marijuana dispensaries within the ambit of the City’s business permit ordinance while strengthening the provisions of that ordinance which prohibit the issuance of business permits to businesses that conduct activities that are illegal under the Rancho Palos Verdes Municipal Code, the laws of the State of California, or the laws of the United States of America; and

WHEREAS, this ordinance is presented as an urgency ordinance because the above-referenced facts increase the possibility that a medical marijuana dispensary may be established in the City before the City has enacted appropriate regulation, and is, therefore, necessary for preserving the public peace, health, or safety;

NOW, THEREFORE THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES DOES ORDAIN AS FOLLOWS:

Section 1. Urgency Ordinance No. 446U is hereby repealed.

Section 2. Section 5.04.050 of Chapter 5.04 of Title 5 of the Rancho Palos Verdes Municipal Code is hereby revoked and replaced as follows:

“5.04.050 License and tax payment required.

A. There are imposed upon the businesses, trades, professions, callings and occupations specified in this chapter license taxes in the amounts prescribed in this chapter effective upon the effective date of this chapter. It is unlawful for any person to transact and carry on any business, trade, profession, calling or occupation in the city without first having procured a license from the city so to do and paying the tax prescribed in this chapter or without complying with any and all applicable provisions of this chapter.

B. This section shall not be construed to require any person to obtain a license prior to doing business within the city if such requirement conflicts with applicable statutes of the United States or of the state. Persons not so required to obtain a license prior to doing business within the city nevertheless shall be liable for payment of the tax imposed by this chapter.

C. No business license issued by the city pursuant to this chapter shall be construed as authorizing any conduct or continuance of any illegal or unlawful business or practice, or the furnishing, sale, or providing of any service, good, or product that is illegal or prohibited under the laws of the United States, the laws of the State of California, the federal and state constitutions, this Code, or any other applicable law, ordinance, rule or regulation.”

Section 3. Section 5.04.110 of Chapter 5.04 of Title 5 of the Rancho Palos Verdes Municipal Code is hereby revoked and replaced as follows:

“5.04.110 Application—First License

A. Upon a person making application for the first license to be issued hereunder for the applicant’s business for a newly established business, such person shall furnish to the collector a sworn statement, upon a form provided by the collector, setting forth the following information:

1. The exact nature or kind of business for which a license is requested;

2. The place where such business is to be carried on, and if the same is not to be carried on at any permanent place of business, the places of residences of the owners of same;

3. In the event that application is made for the issuance of a license to a person doing business under a fictitious name, the application shall set forth the names and places of residences of those owning said business;

4. In the event that the application is made for the issuance of a license to a corporation or a partnership, the application shall set forth the names and places of residence of the officers or partners thereof;

5. In all cases where the amount of license tax to be paid is measured by gross receipts or by the number of dwelling units, of square feet of commercial or industrial buildings constructed as provided in this chapter, or by the number of vehicles used or other computation, count or similar criteria, the application shall set forth such information as may be therein required and as may be necessary to determine the amount of the license tax to be paid by the applicant;

6. Any further information which the collector may require to enable him to issue the type of license applied for;

7. If the amount of the license tax to be paid by the applicant is measured by gross receipts or by the number of dwelling units or square feet of commercial or industrial buildings constructed as provided in this chapter, or by the number of vehicles used or other computation, count or similar criteria, he shall estimate the gross receipts or number of bedrooms and dwelling units or number of square feet of commercial or industrial buildings constructed, or the number of vehicles to be used or other criteria, respectively, for the period to be covered by the license to be issued. Such estimate, if accepted by the collector as reasonable, shall be used in determining the amount of license tax to be paid by the applicant; provided, however, the amount of the license tax so determined shall be tentative only, and such person shall, within thirty days after the expiration of the period for which such license was issued, furnish the collector with a sworn statement, upon a form furnished by the collector, showing the actual gross receipts or number of dwelling units or square feet of commercial or industrial buildings constructed, or number of vehicles or other criteria, respectively, during the period of such license, and the license tax for such period shall be finally ascertained and paid on the basis of such actual gross receipts, number of bedrooms and dwelling units or square feet or number of vehicles or other criteria, as the case may be, after deducting from the payment found to be due, the amount paid at the time such first license was issued.

B. The collector shall not issue to any such person another license for the same, or any other business, until such person shall have furnished to him the sworn statement and paid the license tax as required in this section.”

Section 4. Section 5.04.120 of Chapter 5.04 of Title 5 of the Rancho Palos Verdes Municipal Code is hereby revoked and replaced as follows:

“License—Renewal

In all cases, the applicant for the renewal of a license shall submit to the collector for his or her guidance in ascertaining the amount of the license tax to be paid by the applicant, a sworn statement, upon a form to be provided by the collector, setting forth such information concerning the applicant’s business during the preceding year (or such other period as may be applicable if the license tax period is less than one year) as may be required by the collector to enable him to ascertain the amount of the license tax to be paid by said applicant pursuant to the provisions of this chapter.”

Section 5. Section 5.10.010 of Chapter 5.10 of Title 5 of the Rancho Palos Verdes Municipal Code is hereby amended by adding alphabetically between “Entertainer” and “Massage establishment” the following definition:

““Marijuana dispensary, store, or co-op” shall be broadly and liberally interpreted to mean and include any person who sells marijuana, trades marijuana, exchanges marijuana, barters for marijuana in any way, or makes marijuana available to the public, whether for medicinal or any other purpose, or who, in connection with the foregoing, delivers, locates, stores, places, processes, or cultivates marijuana.”

Section 6. Section 5.10.010 of Chapter 5.10 of Title 5 of the Rancho Palos Verdes Municipal Code is hereby amended replacing the definition of “Permittee” with the following definition:

““Permittee” means any person holding a business permit pursuant to this chapter.”

Section 7. Section 5.10.020 of Chapter 5.10 of Title 5 of the Rancho Palos Verdes Municipal Code is hereby revoked and replaced as follows:

“Section 5.10.020 Permit required for certain businesses.

A. No person shall commence, conduct or purport to commence or conduct the following business activities within the boundaries of the city of Rancho Palos Verdes without possessing a valid business permit issued pursuant to this chapter:

1. Massage establishment*;

2. Massage technician*;

3. Peddler;

4. Marijuana dispensary, store, or co-op**.

B. No person may advertise or announce a business activity located in the city of Rancho Palos Verdes for which a business permit is required by this Code until he or she has obtained a business permit, when required by this Code. For the purposes of this chapter, “advertising” or “announcement” includes, but is not limited to, disseminating pamphlets or handbills, publishing newspaper announcements, and broadcasting advertisements on radio, television, the Internet, or by any other communication device.

C. When any person is engaged in more than one business activity for which a business permit is required in a single location, that person shall be deemed to be conducting each business activity separate and apart from each other business activity even if the separate business activities constitute a single business.

D. No business permit issued by the city pursuant to this chapter shall be construed as authorizing any conduct of or continuance of any illegal or unlawful business or practice, or the furnishing, sale, or provisioning of any service, good, or product that is illegal or prohibited under the laws of the United States, the laws of the State of California, the federal and state constitutions, this Code, or any other applicable law, ordinance, rule or regulation. Any such business permit shall be void.

E. The director shall keep all applications and related records for business permits under this chapter.

* The applicant is required to be fingerprinted by the Los Angeles County Sheriff’s Department.

** Currently this type of use is unlawful and no business permit shall be issued so long as it remains unlawful.”

Section 8. Section 5.10.030B of Chapter 5.10 of Title 5 of the Rancho Palos Verdes Municipal Code is hereby revoked and replaced as follows:

“B. Contents of Application Form and Renewal Application Form. Applications for business permits and renewal application for business permits shall contain the following information:

1. Identification of the applicant, including the name of the business and the name of all owners of the business. Where the applicant is a corporation, association, partnership, limited partnership or other legal entity, “applicant” shall mean each partner, officer, director, and each shareholder owning or controlling more than ten percent of such entity. “Applicant” shall also mean each partner, officer, director, and any shareholder owning or controlling more than ten percent of any corporation, association, partnership, limited partnership or other legal entity that is an officer, director, shareholder, general partner or managing partner of any such entity that comprises the applicant. Rules and regulations governing the procedure for fingerprinting and photo identification, where such fingerprinting and photo identification is required by an application for a particular business permit, shall be established by the Los Angeles County Sheriff’s department, license detail. A business permit may be issued to a corporation or to a person operating under a fictitious name who has complied with all of the applicable provisions of the Business and Professions Code of this state. In all other cases, a business permit must be obtained in the true name of the individual, or individuals, so applying;

2. A complete description of the business activity proposed to be operated, and the location of such proposed business activity, including the address, telephone number and zone;

3. The name(s), address(es) and telephone number(s) of the property owner(s);

4. The previous use of the property or business, the length of time the building was vacant, and whether there are existing signs on the building;

5. Any changes in signage proposed by the applicant;

6. The number of parking spaces and handicap spaces;

7. The presence and type of landscaping;

8. The presence of trash enclosures;

9. The number of employees;

10. The date the business is expected to open;

11. The proposed hours of operation;

12. An affirmation by the applicant that the business will not be an illegal or unlawful business or practice, and that it will not furnish or provide any service, good, or product that is illegal or prohibited under the laws of the United States, the laws of the State of California, the federal and state constitutions, this Code, or any other applicable law, ordinance, rule or regulation; and

13. Any additional information required for the permitting of a particular business when such additional information is specifically required pursuant to other provisions of Title 5.”

Section 9. Section 5.10.040A.4. of Chapter 5.10 of Title 5 of the Rancho Palos Verdes Municipal Code is hereby revoked and replaced as follows:

“4. The business is an illegal or unlawful business or practice under the laws of the United States, the laws of the State of California, the federal and state constitutions, this Code, or any other applicable law, ordinance, rule or regulation; or involves the furnishing, sale, or provisioning of any service, good, or product that is illegal or prohibited under the laws of the United States, the laws of the State of California, the federal and state constitutions, this Code, or any other applicable law, ordinance, rule or regulation; or the business, or any part, conduct, or aspect of the business, is prohibited in the particular location or zone by any law, statute, rule, or regulation.”

Section 10. Section 5.10.040B.4. of Chapter 5.10 of Title 5 of the Rancho Palos Verdes Municipal Code is hereby revoked and replaced as follows:

“4. The business is an illegal or unlawful business or practice under the laws of the United States, the laws of the State of California, the federal and state constitutions, this Code, or any other applicable law, ordinance, rule or regulation; or involves the furnishing, sale, or provisioning of any service, good, or product that is illegal or prohibited under the laws of the United States, the laws of the State of California, the federal and state constitutions, this Code, or any other applicable law, ordinance, rule or regulation; or the business, or any part, conduct, or aspect of the business, is prohibited in the particular location or zone by any law, statute, rule, or regulation;”

Section 11. Findings. The City of Rancho Palos Verdes issues business licenses and business permits for businesses doing business within its boundaries. The City has not yet established any express regulation banning medical marijuana dispensaries, stores, or co-ops so long as their operation violates federal, state, or local laws. The establishment of medical marijuana dispensaries, stores, or co-ops within the City, in violation of federal law, has the potential to cause adverse impacts to surrounding development and to risk the public peace, health, safety, and welfare of the City’s residents and the general public. Further, public officials and employees are put at risk for being co-conspirators if required to issue business licenses and business permits to businesses whose activities violate federal law. Thus, it is urgent that the City adopt this ordinance requiring that all marijuana dispensaries, stores, and co-ops obtain a business permit before operating within the City’s jurisdictional boundaries, while clarifying the provisions that prohibit the issuance of a business permit to those businesses that conduct activities that are illegal under the Rancho Palos Verdes Municipal Code, the laws of the State of California, or the laws of the United States of America, and reinforcing that business licenses do not authorize the conduct of unlawful businesses or activities. Based on the foregoing, the City Council hereby finds that there exists a current and immediate threat to the public health, safety or welfare requiring this regulation of marijuana dispensaries, stores, and co-ops; further hereby finds that this ordinance is necessary for the immediate preservation of the public peace, health or safety; hereby declares the facts constituting the urgency; and passes this ordinance by at least a four-fifths vote of the City Council. Accordingly, this measure is adopted immediately upon introduction pursuant to Government Code Section 36934 and shall take effect immediately pursuant to Government Code Section 36937(b).

Section 12. The City Council declares that, should any provision, section, subsection, subdivision, paragraph, sentence, clause, phrase or word of this ordinance be rendered or declared unconstitutional, or invalid, or ineffective by any final action in a court of competent jurisdiction, or by reason of any preemptive legislation, the remaining provisions, sections, subsections, subdivisions, paragraphs, sentences, clauses, phrases and words of this ordinance shall remain in full force and effect. The City Council hereby declares that it would have passed each provision, section, subsection, subdivision, paragraph, sentence, clause, phrase or word thereof, irrespective of the fact that any one (1) or more provisions, sections, subsections, subdivisions, paragraphs, sentences, clauses, phrases or words be declared unconstitutional, or invalid, or ineffective.

Section 13. The City Clerk shall cause this Ordinance to be posted in three (3) public places in the City within fifteen (15) days after its passage, in accordance with the provisions of Section 36933 of the Government Code. The City Clerk shall further certify to the adoption and posting of this Ordinance, and shall cause this Ordinance and its certification, together with proof of posting, to be entered in the Book of Ordinances of the Council of this City.

Section 14. This Ordinance shall go into effect and be in full force and effect immediately upon adoption.

PASSED, APPROVED and ADOPTED this _______ day of October, 2006.

AYES:

NOES:

ABSENT:

______________________________

MAYOR

ATTEST:

__________________________________

CITY CLERK

I HEREBY CERTIFY that the foregoing is true and correct copy of Ordinance No. ___U approved and adopted by the City Council of the City of Rancho Palos Verdes at a meeting thereof held on the _____ day of October, 2006.